Financing consultant sought for desal project

Regional water authority officials are set to consider on Thursday hiring a capital financing consultant to offer advice on public financing proposals for California American Water's desalination plant project.

The authority board is scheduled to meet on Thursday at 7 p.m. in Monterey City Council chambers.

A draft scope of services document said the authority is looking for a financing expert to conduct peer review of the Monterey Peninsula Water Management District's own financing analyses and offer independent findings on financing structures, credit ratings, market conditions and the like.

The consultant would be asked to provide testimony in support of that offered by the authority and water management district by the Feb. 22 deadline for submitting formal testimony in the state Public Utilities Commission proceeding on Cal Am's water supply project application, and be available for CPUC evidentiary hearings April 2-11.

Authority vice-president Jason Burnett said Monday a preferred consultant has been identified but he declined to say who it was, nor how much the work would cost.

Among the issues the consultant would be expected to address include:

· Whether the water management district has sufficient debt capacity to provide a public contribution toward the cost of Cal Am's desal plant designed to lower the long-term interest rate.

· Whether the district could sell private activity certificates of participation and offer the proceeds to an investor-owned utility — Cal Am — without an ownership stake in the desal plant or its water.

· How debt could be structured so it could not be booked as a debt by Cal Am.

· Financing alternatives for the plant's debt component, current market conditions, and the relationship between taxable and tax-exempt bond markets.

The regional water authority has spent about $87,000 on consultants so far, including about $73,000 for Carlsbad-based Separations Processes, Inc.

SPI conducted a comparison study of the three competing desal plants proposed by California American Water, DeepWater Desal and the newly renamed Regional Desalinization Project at Moss Landing Commercial Park, and released a final report last week that found Cal Am's project would be considerably more expensive than the other two in terms of cost per acre foot per year, but would be the quickest to the finish line. Cal Am has predicted its proposal would be ready to deliver water by the end of 2017, a year after the state-imposed deadline.

SPI is set to deliver an updated report by next month, in advance of the Feb. 22 deadline. The water authority is planning to use the updated report to inform its choice for a preferred desal plant project.

Sub-consultant Kris Helm was also hired for about $14,000 to conduct permitting and environmental analysis of the projects.